Advanced Series Trust AST Academic Strategies Asset ... - Prudential

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Liquidity and valuation risk. Certain exchange-traded derivatives may be difficult or impossible to buy or sell at the time that the
seller would like, or at the price that the seller believes the derivative is currently worth. Privately negotiated derivatives may be
difficult to terminate, and from time to time, a Portfolio may find it difficult to enter into a transaction that would offset the losses
incurred by another derivative that it holds. Derivatives, and especially privately negotiated derivatives, also involve the risk of
incorrect valuation (that is, the value assigned to the derivative may not always reflect its risks or potential rewards). See
“Liquidity and valuation risk,” below.
Hedging risk. Hedging is a strategy in which a Portfolio uses a derivative to offset the risks associated with its other holdings.
While hedging can reduce losses, it can also reduce or eliminate gains or cause losses if the market moves in a manner different
from that anticipated by the Portfolio. Hedging also involves the risk that changes in the value of the derivative will not match
the value of the holdings being hedged as expected by the Portfolio, in which case any losses on the holdings being hedged may
not be reduced and in fact may be increased. No assurance can be given that any hedging strategy will reduce risk or that
hedging transactions will be either available or cost effective. A Portfolio is not required to use hedging and may choose not to
do so.
Commodity risk. A commodity-linked derivative instrument is an financial instrument, the value of which is determined by the
value of one or more commodities, such as precious metals and agricultural products, or an index of various commodities. The
prices of these instruments historically have been affected by, among other things, overall market movements and changes in
interest and exchange rates and have may be volatile than the prices of investments in traditional equity and debt securities.
Equity securities risk. There is the risk that the value or price of a particular stock or other equity or equity-related security owned by
a Portfolio could go down and you could lose money. In addition to an individual stock losing value, the value of the equity markets
or a sector of those markets in which a Portfolio invests could go down. A Portfolio’s holdings can vary from broad market indexes,
and the performance of a Portfolio can deviate from the performance of such indexes. Different parts of a market can react differently
to adverse issuer, market, regulatory, political and economic developments.
Expense risk. Your actual cost of investing in a Portfolio may be higher than the expenses shown in “Annual Portfolio Operating
Expenses,” above for a variety of reasons. For example, fund operating expense ratios may be higher than those shown if a Portfolio’s
average net assets decrease. Net assets are more likely to decrease and Portfolio expense ratios are more likely to increase when
markets are volatile. In addition, because the Portfolios are used as Underlying Portfolios for certain asset allocation Portfolios, a
large-scale purchase and redemption activity by the asset allocation Portfolios could increase expenses of the Underlying Portfolios.
Fixed income securities risk. Investment in fixed income securities involves a variety of risks, including credit risk, liquidity risk and
interest rate risk.
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Credit risk. Credit risk is the risk that an issuer or guarantor of a security will be unable to pay principal and interest when due,
or that the value of the security will suffer because investors believe the issuer is less able to make required principal and
interest payments. Credit ratings are intended to provide a measure of credit risk. However, ratings are only the opinions of the
agencies issuing them and are not guarantees as to quality. The lower the rating of a debt security held by a Portfolio, the greater
the degree of credit risk that is perceived to exist by the rating agency with respect to that security. Some but not all U.S.
government securities are insured or guaranteed by the U.S. government, while others are only insured or guaranteed by the
issuing agency, which must rely on its own resources to repay the debt. Although credit risk may be lower for U.S. government
securities than for other investment-grade securities, the return may be lower.
Liquidity risk. Liquidity risk is the risk that the Portfolio may not be able to sell some or all of the securities its holds, either at the
price it values the security or at any price. Liquidity risk also includes the risk that there may be delays in selling a security, if it
can be sold at all. See “Liquidity and valuation risk,” below.
Interest rate risk. Interest rate risk is the risk that the rates of interest income generated by the fixed income investments of a
Portfolio may decline due to a decrease in market interest rates and that the market prices of the fixed income investments of a
Portfolio may decline due to an increase in market interest rates. Generally, the longer the maturity of a fixed income security,
the greater is the decline in its value when rates increase. As a result, funds with longer durations and longer weighted average
maturities generally have more volatile share prices than funds with shorter durations and shorter weighted average maturities.
The prices of fixed income securities generally move in the opposite direction to that of market interest rates. Certain securities
acquired by a Portfolio may pay interest at a variable rate or the principal amount of the security periodically adjusts according
to the rate of inflation or other measure. In either case, the interest rate at issuance is generally lower than the fixed interest rate
of bonds of similar seniority from the same issuer; however, variable interest rate securities generally are subject to a lower risk
that their value will decrease during periods of increasing interest rates and increasing inflation.
Foreign investment risk. Investment in foreign securities generally involve more risk than investing in securities of U.S. issuers.
Foreign investment risk includes the following risks:
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